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Rating

7Overall

7
Importance

8
Innovation

6
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Recommendation

In fewer than 100 pages, author Richard Vague sets out to persuade you that the relative and absolute levels of privately held debt within a major economy can predict financial crises. Economic growth always includes the growth of private credit, but periodic booms push the economy out of sync and into crisis. Vague says he’s created an algorithm – not in the book but available online – that can predict these booms and busts, making them preventable. Additionally, he advocates for measures to restructure private-sector loans that would bring borrowers and the economy quickly back to normal after crashes. Though some of his arguments could use greater elucidation and sourcing, and some of his proposals seem contradictory, getAbstract suggests this concise work to those curious about the potential causes and cures of financial crises.

In this summary, you will learn

Why growth in private debt is a pivotal economic metric,

Why analysts have overlooked its significance, and

Why policy makers should restructure borrowings and avoid bank bailouts as part of recovering from financial crises.

About the Author

Richard Vague, a former banker, is currently a managing partner of Gabriel Investments and the chairman of the Governor’s Woods Foundation, a philanthropic enterprise.

Summary

Focus on Private Debt While the loud, passionate political debate about “austerity vs. stimulus” rumbles on, the real driving force pulling the strings of national economies gets too little attention. You can find the key to understanding economic turbulence by studying private debt levels...